All Forum Posts by: Greg K.

A good agent could sell anything of course.  But I did live in a house in Brighton for a year. For 3 months I had no idea that the basement was occupied by a professional jazz band.  They had paid to have serious sound insulation installed, and they rehearsed all the time.  Drum set and all.

@Minna Reid , @Theresa Harris,  @Brent Coombs, it took me a little while to mull all of this over, just re-read.  This thread has been tremendously helpful.  Thank you!

@Wayne Brooks with no 'fee' I'll have no way to care for my elderly mother.  That's the point.  Sure, could be just a sob story, could be true.

Yes, I am in fact contradicting myself.  At least in the sense that I am comparing two similar, but not quite identical types of niche RE transactions.  At one point I was told, that all Short Sales  are by definiton Short Pays, only that a Short Sale would have additional requirements, require Arms-Length, etc.

Regardless, thank you everybody for your help.

I don't blame you at all for thinking this! And actually appreciate you stating it clearly. But at this moment, I have a legally binding agreement. The program has been approved. No arms-length mention. Definitely no affidavit. They said unless the funds are obtained through traditional financing , a HUD-1 isn't even needed.

I absolutely refuse to engage in illegal transactions.  Even if I did want to, do you think I would be posting for advice about it on this forum?

I'm trying to be triply sure that I'm doing things by the book.  And you might say "Hire an attorney", well, my Attorney advised me already, and SPS isn't being cooperative.  Really just in the dark at this point 

Sorry but they in this case refers to SPS? My concern is that I am not buying the property. But rather, negotiating the sale of it, between her and my best MLS bidder(yet another thing they verbally said would not be a problem). US dollars are my endgame for this deal, not a property. Thus, I post this story on here, that I'd probably be better off keeping to myself, but I really can't tell what is happening or what they plan to do.

I can't even think of what sort of specialist to hire to aid in this.  A broker savvy with short sales?  A very 'creativity' friendly attorney?  I havent found one yet in my area

The owner is in fact my mother.  I'm not sure how or why, or if this is specific to the note holder they represent(HSBC), but after the most minor legal tiff, where I was able to obtain a stay on the foreclosure sale, I called them and they informed me of this Short Pay program, which was previously not even a visible option on their web portal.  One of the reps, advised me as follows:

I should obtain the funding needed to 'Short' pay off the mess of a balance.  Then gift it to my mother.  Then have her wire the reduced amount to them.  And then, if she wants, she can record title of the property over to me, or keep it, they didn't care.  But he said this was just one example of what I could do

Precisely so.  Hence it is a 'Short Pay' not a "Short Sale'.  They verbally stated that as long as the money is sent, they don't care to know, nor want to know what happens with the property.

Although nervous at first, I chose to take the route of absolute transparency.  I told them their BPO's were offly low.  And the rep said "Well that will work in your favor".  I have been continuously reminding them of my intentions.  I have no interest in fraud charges or deficiency judgments.  And they clearly just want to liquidate this asset 

@Minna Reid, 

That's VERY good to know that this is standard/boilerplate wording. I am actually related to the seller, and negotiating on her behalf, but also intent on making a profit from the transaction. I listed the property yesterday and am having trouble coming up with a way of phrasing a P&S to allow for this. Even though I expressly informed SPS of my intention, and they verbally stated it was ok. For me to make a profit, and also to incorporate all the moving parts into one P&S.

I just thought it odd how broad of a scope the contract was covering by stating "ANY surplus funds shall be the exclusive property of SPS"

Thank you for the response

@Carl Fischer

Thanks for the reply.  I should be more succinct:

Borrower:  Still on the deed.

Lender is executing Foreclosure sales, that just keep getting rescheduled, while I painstakingly continue to try to negotiate with them.

Incidentally, borrower is my mother.  Short Payoff was offered by the lender as an alternative to previously approved Short Sales, so as to avoid committing any fraud.

Has anyone ever seen such a clause in a contract(approval letter with terms) for a hardship based Short Pay, or even for a Short Sale?)

"Dear Customer(s):

Select Portfolio Servicing, Inc. (SPS), the mortgage servicer on the above referenced account, received your request

to accept a compromised payoff from the proceeds of the refinance of the above referenced property, or “Short

Payoff.......

****

.1. SPS must receive the net proceeds from the Short Payoff in an amount not less than [redacted] no later

than [redacted] (the Closing Date). The net proceeds must be in the form of wired funds or certified

funds, and must be made payable to Select Portfolio Servicing, Inc. No personal checks will be accepted.

Wiring funds is the preferred method of payment, and instructions are attached.....

***

3. In consideration for SPS’s agreement to accept the Short Payoff, in no event shall you receive any funds from

the Short Payoff (unless otherwise approved in advance by SPS). Any surplus funds above the agreed upon

net proceeds at the time of closing are the exclusive property of SPS, and you agree that any such funds will

be remitted to SPS, made payable to Select Portfolio Servicing, Inc........

***

...Provided that all terms and conditions set forth above have been satisfied, written confirmation that the payoff funds are in

Escrow along with a final HUD-1 Settlement Statement/Closing Disclosure shall remove all conditions of approval for

this Short Payoff. Upon satisfaction of all terms of this approval, the mortgage will be discharged in its entirety with any deficiency rights

waived, and a lien release document will be forwarded to the appropriate county for recording......

”

Am i crazy, or does this contract ,(The two sections that are underlined) in effect, contradict itself?  Verbally I told them I absolutely would like to profit from this, and they said no problem at all.  "We just want our $XXX,XXX".

I am NOT trying to solicit legal consul, and will not treat any response as such.  But my lawyer already said I need to make them change this contract.  And so far the reps have only said the exact opposite of what was promised(verbally) from the start.

Any advice?  Is the first underlined clause just a formality that never gets enforced?

A thousand thank you's for any ideas or insights!

Cheers.

-Greg

Has anyone ever seen such a clause in a contract(approval letter with terms) for a hardship based Short Pay, or even for a Short Sale?)

"Dear Customer(s):

Select Portfolio Servicing, Inc. (SPS), the mortgage servicer on the above referenced account, received your request

to accept a compromised payoff from the proceeds of the refinance of the above referenced property, or “Short

Payoff.......

****

.1. SPS must receive the net proceeds from the Short Payoff in an amount not less than [redacted] no later

than [redacted]  (the Closing Date). The net proceeds must be in the form of wired funds or certified

funds, and must be made payable to Select Portfolio Servicing, Inc. No personal checks will be accepted.

Wiring funds is the preferred method of payment, and instructions are attached.....

***

 3. In consideration for SPS’s agreement to accept the Short Payoff, in no event shall you receive any funds from

the Short Payoff (unless otherwise approved in advance by SPS). Any surplus funds above the agreed upon

net proceeds at the time of closing are the exclusive property of SPS, and you agree that any such funds will

be remitted to SPS, made payable to Select Portfolio Servicing, Inc........

***

...Provided that all terms and conditions set forth above have been satisfied, written confirmation that the payoff funds are in

Escrow along with a final HUD-1 Settlement Statement/Closing Disclosure shall remove all conditions of approval for

this Short Payoff.  Upon satisfaction of all terms of this approval, the mortgage will be discharged in its entirety with any deficiency rights

waived, and a lien release document will be forwarded to the appropriate county for recording......

”

Usage of the word 'you', obviously, refers to the current borrower who is in default.  The Hardship affidavit sent in is quite true and quite tragic.  For whatever reason, they would keep sending out a BPO agent who would value that property, WAY below its true value.

The borrower is a senior citizen who purchased this property in 2006 with all the worst terms and situations of those times, and because of a failed attempt to modify, and an attorney's advice to stop paying, the full Payoff Quote they provide is far more than what the house was bought for, and $145,000 more than the figure they are willing to dismiss the mortgage and liens for.

Truth is, the house has appreciated significantly, because the borrower chose a very smart area to purchase the house.

Because I absolutely refuse to violate any laws when conducting real estate business, AND because I'm trying to get some money for the borrower and myself as well, without having to worry about deficiency suits, etc.

I TOLD THEM THE TRUTH

and said that their BPO's are coming in low.

"Actually Sir, Since you have been approved for Short Sales(in the past) and this Short PayOff right now, it's in your best interest to have a BPO come in below market value".:  - Said the customer rep to me on the phone.

So I said that I will help sell the property, easily obtain more, and keep the difference.  "Is that ok?" , for the 3rd time I asked, since the language of the terms seem odd and contradictory,.

The first two times the response was "Absolutely fine.  We just want our $XXX.XX and after that we don't need to know, nor want to know.

Now that I have the property listed and am showing it, I called once more to double check, and the rep said the exact opposite, but that I should contact the liquidation department if I need any edits or additional clauses added to the agreement.   But was told it was very unlkely.

I need either a very unusual P&S that would tie in this payoff, together with the profits. Verbally, the reps told me this would be totally ok.

Now the deadline is nearing.  I am NOT trying to solicit free legal counsel. I have an attorney who said "Get them to draft a different agreement.  No one is just going to put up this much money(most of the $899,999 asking price it's listed for), by simply wiring it over to the bank.

Anybody have any clue what is going on here?  More importantly, what sort of contract or legal instrument or security instrument could I use to make this deal happen?

There must be a creative and legal way to do this, a nudge in the right direction would be deeply appreciated.

-Greg